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Economic globalisation, technological development, corporate mergers, a lack of forward planning among some workers who fail to engage in ongoing training, and highly competitive markets have all contributed to business crises and generated the need to cut costs through workforce reductions.
The measures a company can take to address these situations fall into two categories: insolvency proceedings and out-of-court measures. Within the out-of-court category, the following classification applies:
1.- Measures affecting employment.
a) Measures aimed at redistributing working time.
b) Measures aimed at reducing labour costs.
2.- Workforce flexibility measures, such as the flexible application of dismissal procedures.
The first category of measures aims to keep workforce adjustments to a minimum. These measures may be negotiated with employee representatives for part of the workforce, for example, internal redeployment within the company, contractual modifications, or phased retirement, as well as measures applicable to the workforce as a whole, such as working-hours adjustments or functional mobility.
The second category of measures offers dismissed employees a route back into the labour market and may include:
· Retraining programmes, designed to reorient the employee professionally or help them access new employment.
· Deferred redeployment or commitments to reinstate the employee once the crisis has passed.
· Self-employment support, whereby the company assists the employee in setting up their own business.
· Provision of the training needed to facilitate the employee's redeployment.
· Social measures, such as allowing the employee to continue using company-owned housing.
Most of these tools are incorporated into a Social Plan, defined as the package of measures in favour of the group of employees affected by the company's decision to terminate employment, with the aim of reducing the social impact of workforce restructuring. All of these measures may be established through collective bargaining.
One of the most innovative measures to have been introduced in Spain in recent years is 'Interim Management', the temporary secondment or loan of senior executives. Under this model, a client company engages a senior manager on a short-term basis, having been matched with them by an interim management company, to navigate periods of change or transition in which that manager has specialist expertise. This is an employment arrangement designed to benefit the company rather than the individual employee.
The situations in which this approach is most advisable include: the reorganisation of loss-making businesses, organisational crises, leadership crises, start-up scenarios where founders lack management experience, business spin-offs, post-acquisition integration, the entry of new shareholders, and the execution of large-scale projects.
This model offers significant advantages for the company. It converts fixed costs into variable ones, providing a flexible and versatile pool of senior talent with specialist knowledge that may not exist within the company itself. It is a bespoke, functional service that eliminates the learning curve, a specialist is brought in precisely because they can hit the ground running. The key benefit for the company is that once the assignment is complete, the manager leaves and no severance pay is payable. It is equally attractive for the managers themselves, who often find the temporary change of challenge to be a strong professional incentive.
These individuals are typically senior external executives with experience across a wide range of industries and in high-level management roles. Assignments are not lengthy, they generally last between 6 and 15 months, and remuneration takes the form of daily fees, which vary depending on the role or the project involved. As a baseline, fees are typically calculated by reference to the full employment cost of a permanent employee performing equivalent duties, factoring in Social Security contributions, final settlement (finiquito) payments, pension contributions, sick pay, and other associated costs.
The drawbacks of this model relate primarily to the interim manager's lack of attachment to the company and its workforce. This can lead to decisions being taken with the company's future in mind rather than the wellbeing of its employees, and may create a difficult working environment, one which the company will need to address through other means.
Another key support measure accompanying dismissal, provided for both in the Social Plan and in collective bargaining agreements, is outplacement. This consists of a package of services delivered by a specialist consultant to a company and to the departing professional at the point of negotiating the termination of their employment relationship, with the aim of providing the guidance and support needed for that individual to continue their career outside the company.
In this way, the employee receives the help needed to better cope with the impact of dismissal and gains access to the tools required to conduct an effective job search. By directing candidates towards roles that best match their profile, outplacement significantly reduces the time it takes to find new employment. The company, in turn, benefits both in intangible terms, protecting its reputation and maintaining or improving productivity, and in concrete financial terms, principally through a reduction in the costs associated with dismissal arising from unfair dismissal claims.
The circumstances that give rise to outplacement may be individual or collective in nature. Individual outplacement typically applies to senior executives and focuses on teaching them specific job-search techniques. Collective outplacement, by contrast, is aimed at groups of mid- to lower-level employees who become redundant. Examples of collective outplacement programmes include dual or spousal support programmes, group programmes, and employment outreach hubs.
It should be noted that these are support measures designed to mitigate the effects of dismissal, not to prevent it. And while they generate benefits for both parties, they are clearly oriented towards reducing the negative impact that this decision has on the company.
In practice, this process faces a number of limitations that reduce its effectiveness: the reliance on the candidate's degree of specialisation within their sector, the inflexibility of employment legislation, and the high severance costs that discourage companies from engaging these services. A significant drawback is the encroachment by other businesses whose corporate purpose differs but who offer services similar to outplacement, such as temporary staffing agencies (ETTs), Interim Management firms, and headhunters.
These employment measures for situations of business crisis are still relatively new and not yet widely used in Spain. If you would like to know more, please do not hesitate to contact our firm, we will be happy to advise you on the legal aspects and practical application of these approaches.
